Sam Bowman: Media plurality depends on reform of the BBC

Sam Bowman is Head of Research at the Adam Smith Institute

News International isn’t a monopoly, and it never has been. As Tim’s post this week showed, the BBC dominates broadcast and online news, and News International’s newspaper holdings can at best be seen as a strong stake in a competitive (if declining) market. Concerns about News International are valid, but as long as the BBC exists in its current form, some kind of News International-like firm is likely to be the only viable competition. The BBC is the root cause of Britain’s media malaise and it needs radical reform.

The phone hacking crimes are unforgivable, and if News International executives were aware of them they should be held to account. And the cosy relationship between it and successive British governments – of all stripes – is worrying. The press should be at odds with government, not in bed with it.

But News International’s size and influence is a direct consequence of its even larger rival. The BBC’s enormous market share in television, radio and on the internet has crowded out smaller competitors who are trampled under the BBC’s feet. Only another media behemoth could profitably compete with the BBC. Creating one state-sanctioned media colossus has meant that only other giants can compete.

Monopolies are always bad for consumers, but oligopolies are hardly much of an improvement either. The government could cut down News International as much as we like, but until we address the root media monopoly – the BBC – another big player would take News International’s place.

Subsidies for the pike mean death for the minnows. If we really want media plurality, the BBC itself needs reform.

The BBC can’t and shouldn’t be abolished outright. Nor should it be privatized in the conventional open market floatation fashion. There are valuable parts of the BBC that could not survive on a pure profit, open market basis. Indeed, these are the parts that make many view the BBC as a national treasure.

The model that we should aim to apply to the BBC is that of the National Trust – an open, mutually owned body that preserves some of the best things about Britain for the benefit of everybody. The National Trust is the largest voluntary subscription charity in Britain and preserves areas of national heritage for everybody. A BBC National Trust could do the same.

People willing to pay for the National Trust do so for everybody’s benefit. Many people would be prepared to sign up on a similar basis to become a BBC National Trust member – paying a small subscription every year to support the things that private rivals to the BBC could not do for profit.

The transition process would be relatively simple. The government would announce that, when the BBC’s royal charter expires in 2016, it will reform the licence fee along voluntary lines. The BBC would have the next five years to sell off what it would not be able to justify to its voluntary members, and reorganize itself along charitable lines. Subscribers would be able to sign up to different levels of membership, as with the National Trust.

This would mean an end to the anachronistic, unfair and regressive TV licence fee. The BBC would have to shrink significantly, retaining the services that people value from the BBC that wouldn’t survive on a pure profit basis – arts, culture, current affairs and the like.

The BBC’s huge expenditure on services that the private sector can provide crowds out opportunities for profit. Take online news, which the BBC spends hundreds of millions of pounds on, despite ample private sector provision. That would probably have to go, creating profit opportunities for the flagging newspaper industry’s online content. Likewise for much of the BBC’s TV and radio entertainment programming. If the private sector can do it, there is no case for the BBC trying to compete with them.

A BBC National Trust would keep the good parts of the BBC, end the bad parts, and do so in a way that was open to everybody. And News International’s critics would be pleased too. As the BBC shrinks, new opportunities for profit would arise and new rivals to News International will grow. Corporate giants have feet of clay. When barriers to market entry are removed, they stumble over new rivals. Ending the BBC monopoly would be a significant step towards restoring media plurality in Britain.